Sustainability Report 2019

SUSTAINABILITY REPORT

SUSTAINABILITY REPORT

Contents Letter to our stakeholders Sustainability report - note on methodology

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1 - The identity of Fumagalli Industria Alimentari Fumagalli Industria Alimentari 12 A family history 14 The Nerviano breeding centres 16 Corporate Governance Allevamenti Di Nerviano S.r.l.

17 Corporate Governance Fumagalli Industria Alimentari S.p.A. 18 Our way of doing business – The Ethical Label Project 20 Fumagalli in numbers 22 Fumagalli worldwide 24

2 - Fumagalli Industria Alimentari and its sustainable strategy Sector overview: risks and opportunities Strategic objectives 2019-2020 Product development Research and development goals achieved in 2019 Fumagalli and its sustainable development goals Our stakeholders Materiality analysis

28 29 30 31 32 33 34

3 - Fumagalli’s economic responsibility in numbers The importance of creating value Creating wealth: generated and distributed value

38 40

4 - Environmental responsibility

6 - Product responsibility

Our commitment to sustainability 44 Raw materials 45 Electricity consumption and GHG emissions 46 Water 48 Waste 48 Biodiversity 49

Our products

5 - Social responsibility

8 - A top quality, sustainable supply chain

How to get a job well done 52 Our employees 53 Education 54 Fumagalli Industria Alimentari S.p.A. suppliers 55 Allevamenti Di Nerviano S.r.l. suppliers 56 Relations with the local communities 57 Our relationship with the media: communicating and connecting 58

Selection and reproduction of our breed 72 Raising our pigs 73 Slaughtering 74 Processing 75 Our control network 76 Our organic range 77

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7 - Animal welfare first and foremost Animal welfare in our breeding centres 66 Awards 68

Dott. Francesco Pizzagalli CEO

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FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Letter to our stakeholders “We all live under the same sky, but we don’t all have the same horizon”.

As we present our 2019 Sustainability Report, the first thing I would like to do is apologise for the delay in its publication. This delay was due to difficulties caused by the pandemic, which also extended the time needed to draw up our economic and administrative reports.

Unfortunately the situation has precipitated again in the past few months and, when analysing our Sustainability Report, you can’t help but reflect on how much our country has had to cope with recently. The future may look bleak but we must stay strong and look critically at the present, embracing the positive elements that will help propel companies into a future that will certainly never be the same again. The pandemic has exposed the weaknesses in the way we think, but also in our social, economic and political system.

What it has heightened, however, is our awareness of finding the right balance in our relationship with nature and the environment.

We need to focus on finding an economic development model that cares more about “better” than “more”. Over the past few months, the emergency has brought to our attention issues that had already been around for years. This new state of tension, together with grave concern for our future and the future of our businesses, has brought the theme of sustainability to the fore.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

K.Adenauer

Sustainability is a key value which, unfortunately, for many years was relegated to university lecture halls and conferences, as if it were some vague theory. Today companies are socially accountable and this can only be achieved by focussing our attention on the values that will help secure our future, values which stem from sustainability: our relationship with the environment, human capital, corporate welfare, education, research and development, new business governance models. Our 2019 Sustainability Report marks the end of a stage in our journey. In 2020 we have had to deal with changes that will act as the foundation for new, different developments. If I could use a sports metaphor, from the world of cycling, I would say that over the years the stages we have had to face have been challenging but flat. Now we’ve hit the mountains and the going has just got tough. We mustn’t, however, lose hope of what the future has in store for us, as we have such a great history and tradition of values which, in today’s modern world, express our expertise and passion for what we do.

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Sustainability Report note on methodology Fumagalli Industria Alimentari has decided once again to share its corporate strategies and economic, environmental and social performance in its 2019 Sustainability Report. This document is a summary of the Report and has been compiled to make the data more accessible and easier to understand for all our stakeholders.

It contains the 2019 data for the Tavernerio (CO) headquarters and our Langhirano (PR) packing centre. This year we have also included the data of Allevamenti di Nerviano.

This publication has been drawn up in compliance with the new GRI Sustainability Reporting Standards (2016) and the Food Processing Sector Disclosures (2014), both published by the Global Reporting Initiative (GRI), according to the “Core” option.

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The reporting process used by Fumagalli Industria Alimentari S.p.A. consists of gathering the information and qualitative and quantitative indicators needed to draw up the Report. This Sustainability Report was prepared by a working group with the assistance of AzzeroCO2 (a company which promotes sustainability and energy efficiency and is affiliated with LEGAMBIENTE and Kyoto Club) and the involvement and active collaboration of colleagues from various departments. It was then examined and approved by company management. Fumagalli Industria Alimentari S.p.A. has voluntarily decided to publish its Sustainability Report annually.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

CONTACTS For more information and details, please contact info@fumagallisalumi.it or visit the website www.fumagallisalumi.it.

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The L’identità identity di ofFumagalli Fumagalli Industria Alimentari

Fumagalli Industria Alimentari The company’s values are deeply rooted in those of its local area, in fact it has taken the rich culinary tradition of Lombardy and applied traditional recipes and DPO and PGI products to create its own special offerings. At Fumagalli we believe that being solely responsible for our supply chain, ensuring its constant monitoring, implementing the highest possible animal welfare standards and

paying due attention to environmental issues is what singles us out and gives us a strong market presence. Ours is the only system of its kind in Italy and one of very few in Europe. Our production, covering a wide range of typical Italian cured meats, is customeroriented, focusing on quality and guaranteeing the origin of our pork meat.

The companies in the Group The Fumagalli Group is made up of three companies:

stagionaure

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FUMAGALLI INDUSTRIA ALIMENTARI S.P.A.

ALLEVAMENTI DI NERVIANO S.R.L.

STAGIONATURE FUMAGALLI S.R.L.

With headquarters in Tavernerio (CO) and a packing centre in Langhirano (PR)

Breeding centres with headquarters in Nerviano (MI) and other farms in Lombardy, Veneto and Piedmont

With headquarters in Langhirano (PR), so we have a Prosciutto di Parma DOP curing facility in the typical area

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

The Fumagalli Group in Italy Genetics and birth centres Genetics, birth centre and organic growth centre 0-25 kg Fattening centres 45-170 kg Organic fattening centres 25-170 kg Growth centres 6-45 kg Slaughtering/processing

Our Charter of Values Our value is our quality. Our Charter of Values defines our corporate polices and establishes the core values which unite everyone who works with and for Fumagalli, the result of a great group effort.

LEGALITY

WILLINGNESS TO LISTEN

QUALITY

CORRECTNESS

TRANSPARENCY

MERITOCRACY

TRUST

POSITIVE ATMOSPHERE

PRODUCT SAFETY FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

RESPONSIBILITY 13

A family history

1920

1945 1946

1960 1980

The Fumagalli family owned a “salumeria”, a typical deli meat shop, in Meda (MI) where they began production of cooked cured meats and cured salami.

At the end of the war, G. e A. Fumagalli s.n.c. was established with Mario’s two sons, Giuseppe and Arnaldo, actively involved in the business.

Arnaldo Fumagalli, with the assistance of his brother-in-law Enrico Mascheroni, took over the company and decided to focus on technological innovation. Fumagalli Industria Alimentari S.p.A. was established and continued its expansion into Switzerland and Germany.

1930

Mario Fumagalli began business on an industrial scale.

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1990

The advantageous investments made at the Tavernerio plant bore fruit, enabling the company to expand into Northern European markets which are especially concerned about product safety. The company set up its integrated and controlled supply chain system that covers all stages of the process, from breeding to product packing. Mario Santi and Francesco Pizzagalli, members of the Fumagalli family, joined the management team in these years.

2000 2010

2014 2015

A new “clean rooms” department was set up in Tavernerio (2001) and a new cutting facility for packing Parma ham built in Langhirano (PR) (2008-2009).

Some of the younger members of the Fumagalli family joined the company (Alberto Mascheroni, Pietro Pizzagalli, Andrea Fumagalli and Arnaldo Santi).

2016

2017

2018

2019

This was an important year as it marked the introduction of the new “Animal Welfare” range, demonstrating the company’s ongoing commitment to animal welfare and its improvement.

The company was singled out by the European Commission to Italian and European breeders as an example of best practice in animal welfare. 2017 was also an important year as the Organic range continued to grow and a dedicated organic supply chain was created.

The company’s leadership role in the Italian pig breeding sector was endorsed in 2018 by the European Commission, which made a video featuring a long interview with Pietro Pizzagalli, director of the Fumagalli breeding centres. The other important event of the year was the restyling of the company’s website and the launch of its online shop.

Fumagalli’s commitment translated into positive numbers and, in particular, those of its organic products which have grown exponentially over the past three years, accounting for 15% of the company’s 2019 turnover. Fumagalli is constantly innovating, in this case producing its own eco-friendly

packaging made with 75% paper and a completely recyclable tray (recyclability certified in Italy by Aticelca Lucca). As further testimony of its ongoing commitment to improving its supply chain, Fumagalli was one of the first companies to join the “Manifest of the Values of Italian Cured Meats” of the Institute for the

Appreciation of Italian Cured Meats (IVSI).

In 2019, Fumagalli’s Sustainability Report received the 6th Identity and Vision Special Prize from BBS - Biblioteca del Bilancio di Sociale - which, every year, analyses, evaluates and awards a prize for the contents of sustainability reports.

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The Nerviano breeding centres This year the Sustainability Report also includes data and information about the Nerviano breeding centres. Established in 1962 in Nerviano, it was an open cycle farm until the Nineties, with around 1400 sows reared mainly for selling unweaned piglets. Embracing the philosophy of the integrated supply chain, the farm decided to change direction, turning its unweaned piglets into fattened pigs which were used for the farm’s internal production. With the advent of the new century, the company focussed its investments on increasing productivity, while embarking on a new venture to develop a breeding system that was both ethical and respectful of animal welfare. The company’s vision and commitment to introducing more sustainable and environmentally-friendly forms

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of farming was recognised in 2015 and 2016 when it received animal welfare awards from Compassion in World Farming. 2017 saw the launch of the organic supply chain, while in 2018 the European Commission chose the Nerviano breeding centres as an example of best practice for animal welfare management, making a video which it posted on its website. In 2019 Allevamenti di Nerviano renewed its commitment to animal welfare by taking part in the “Ethical Pig Farm” project, whose aim is to study and develop breeding techniques using high animal welfare standards on pig farms.

To date, more than 32,000 pigs have been weaned at the Nerviano centre (5% for reproduction purposes, the rest for fattening).

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Corporate Governance Allevamenti di Nerviano S.r.l.

The Shareholders’ Meeting is made up of 3 members of the Fumagalli family: • Francesco Pizzagalli; • Elena Bruni; • Mario Santi.

The Board of Directors is invested with the broadest powers for the ordinary and extraordinary management of

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

the company and may perform all the operations deemed necessary and opportune for the accomplishment of the corporate purpose.

Allevamenti di Nerviano S.r.l. is administrated by a Board of Directors with three members: • Alice Fumagalli - Chairperson of the Board of Directors; • Pietro Pizzagalli – Director; • Paolo Santi – Director.

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Corporate Governance Fumagalli Industria Alimentari S.p.A. The Shareholders’ Meeting is made up of 4 members of the Fumagalli family • Cesare Fumagalli; • Fumagalli Bianca; • Alice Fumagalli; • Enrico Mascheroni.

The Board of Directors is invested with the broadest powers for the ordinary and extraordinary management of the company and may perform all the operations deemed necessary and opportune for the accomplishment of the corporate purpose.

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Fumagalli Industria Alimentari S.p.A. undertook a project of generational change and its Board of Directors now has 6 members: • Cesare Fumagalli - Chairman of the Board of Directors; • Francesco Pizzagalli - CEO; • Bianca Fumagalli - Director; • Alice Fumagalli - Director; • Enrico Mascheroni - Director; • Mario Santi - Director.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

FRANCESCO PIZZAGALLI

CESARE FUMAGALLI

MARIO SANTI

Powers and responsibilities: Personnel; Administration; Relations with banks; Foreign markets; Italian market.

Powers and responsibilities: Production; Investments; Purchasing (raw materials meat); Commodity exchange; Maintenance

Powers and responsibilities: Management of company’s CSB IT system Italian Legislative Decree no. 81 of 9 April 2008 “Protection of the health and safety of workers in the workplace”

Administration Personnel

Supply chain and Production

Sliced products and snacks at the Langhirano site

Marketing

Quality - Food safety Supply chain

Langhirano site

CEO

President

Purchasing

Sliced products

Breeding centres

Sales

Safeguarding animal welfare

Sales Italy

Foreign Sales

Director

Snacks IT system

Maintenance

Sales Back Office

Shipping

Product transportation

Research and Development Cleanliness Slaughterhouse Hot section

Mincing

Cold section Meat shipping

FUMAGALLI INDUSTRIA ALIMENTARI / Bilancio di sostenibilità 2019

Curing Packing cooked uncooked products

Packing

Cooked internal products Warehouse Production Accessories

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Our way of doing business The Ethical Label project This project allows the company to convey its values to the outside world and communicate its way of doing business where, as well as economic sustainability, themes such as social and environmental sustainability, safety, ethics and complete control over the supply chain are becoming more and more important. The company decided to summarise these values in the four petals of the Ethical Label flower: • Controlled supply chain • Food safety • Sustainable production • Deontology The four petals, representing the four cornerstones of the company’s business strategy, have brought loyalty for our

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cured meats from our customers and Fumagalli continues to generate interest on the market, thanks to evolution in consumer demands and new purchasing awareness.

Sustainability governance means introducing sustainability to all aspects of the company’s management, to secure its success and economic and financial viability in the long term.

The aim of the Ethical Label project is to illustrate and communicate both within and outside the company the key entrepreneurial values which the company’s top management strives to disseminate. The choices we make are not dictated by contingent market opportunities but reflect our innovative and different way of doing business. This is the only way to face the challenges of the future, with sustainability playing the central role in our supply chain.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

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Fumagalli in numbers 2019 turnover € 36,608,805 Number of employees 103 Raw materials processed 4,570,782 kg Total products distributed 3,500,659 kg Total products distributed in Italy 1,771,546 kg 22

Total products exported 1,729,112 kg

ORGANIC PRODUCTION

Organic products sold 176,168 kg

Organic production accounts for

15%

of the company’s turnover

Animal Welfare

Our continuing commitment to improving the living conditions of our pigs Our continuing commitment to improving the living conditions of our pigs

2017 2018 2019

Sows on straw bedding 75% 75% 80% Insemination in pens with freedom of movement

60% 70% 75%

Open farrowing crates 28% 30% 35% Pigs between 7-30 kg grow on straw bedding 56% 60% 75% Pigs which spend their entire life on straw bedding

20% 25% 30%

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Fumagalli worldwide 2019 exports accounted for more than 68% of the total turnover.

Thanks to the hard work and relationships built over the years by the company, we now export to 21 countries including Europe, the Far East and North America; we operate in Italy in the normal trade sector, as well as in the mass retail sector and with retail purchasing consortia.

As regards foreign markets, approximately 60% of the products we export are private labels. Most of our products go into the mass retail channel but the number of shops carrying our organic products is growing, as is the restaurant and catering sector, although to a lesser extent.

COUNTRIES WHERE WE OPERATE

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Arab Emirates, Belgium, Brazil, Canada, Denmark, Estonia, Finland, France, Germany, Hong Kong, Iceland, Japan, Korea, Monte Carlo, Netherlands, Norway, Sweden, Switzerland, Taiwan, United Kingdom, United States of America.

Production value

Euro

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2019 2018 2017 36,608,805 38,039,199 40,172,289

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Revenue per geographical area Area 31/12/2019

Sales (in €) %

31/12/2018 Sales (in €) %

31/12/2017 Sales (in €)

%

Italy 12,400,199 32 12,125,467 31 12,131,056

31

Abroad 26,252,627

69

68

Total 38,652,826 100

27,130,686

69

26,493,465

39,256,153 100 38,624,521 100

The analysis of the revenue per geographical area takes into account closing inventory di finished and semi-finished products

Products distributed (kg)

2019 2018* 2017

Distributed in Italy

1,771,546

1,837,242

1,799,904

Distributed abroad

1,729,113

1,792,152

1,810,025

Total products distributed

3,500,659

3,629,394

3,609,929

Unlike in the 2018 Sustainability Report, it was decided to exclude waste products which are then sold as by-products (bones, fat, offal etc.) from the Report

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

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01 2

CHAPTER

Fumagallidi L’identità Industria Fumagalli Alimentari Industriaand itsAlimentari sustainable strategy

Sector overview risks and opportunities For the pork meat sector and, in particular, for cured meat producers, 2019 was one of the toughest years the industry has faced since the 2008 crisis.

It had to respond to a sudden rise in the prices of raw materials caused by the serious outbreak of ASF (African Swine Fever) in China. Following mass slaughtering to stop the spread of the disease, the Chinese demand for pork meat rose dramatically, putting the European market under pressure. The processing industry, whose raw materials costs account on average for 50% of the total cost of production, found itself having to balance the rising costs of raw materials with requests to keep the sales prices

down to help consumption and exports. In light of this, cured meat production in 2019 was down slightly, recording 1.176 million tons compared to 1.184 in 2018 (-0.7%).

In contrast, the value of production rose to Euro 8,128.1 million, up 0.6% on 2018.

As far as exports of Italian cured meats were concerned, according to ASSICA (the Italian national trade association of meat and cured meat producers) elaborations of the first statistical data from ISTAT, exports were 181,142 tons (-0.3%) for a value of Euro 1,568 million (+1.4%)1.

1. Annual Report 2019 - ASSICA (Associazione Industriali delle Carni e dei Salumi), ASSICA has 176 members who represent around 80% of the sector’s turnover.

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FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Strategic objectives 2019 – 2020 Optimisation of company costs Development of human resources Food safety Company certifications Ethical Label project Distribution of Fumagalli products

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

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Product development The macro areas on which to focus development in 2019 were identified by analysing the market and evaluating the results and data collected by the company in previous years, with the help of the sales management team.

eco-friendly packaging materials

The results of these analyses helped us define the areas to focus our research on:

organic products

fresh products with a long shelf life

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FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Research and development goals achieved in 2019 Research and development in 2019 focused on three main areas: • conventional cured meat products which can be sliced and packed using eco-friendly packaging • organic products with a shelf life similar to that of conventional products • fresh cured meat products with a longer shelf life

The research and development project launched by the company to produce its own range of products with a longer shelf life resulted in a salami which can be stored at room temperature, a true innovation for our company. As part of the same project, work began to identify innovative packaging materials and research and development into products packed with these materials.

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Fumagalli and its “Sustainable Development Goals”

Animal welfare: A new concept of intensive farming: • 80% sows live on straw bedding • 75% inseminations occur in pens with freedom of movement • 35% of farrowing crates are open • 75% of pigs between 7 and 30 kg grow on straw bedding • 30% of pigs spend their entire life on straw bedding

Cogeneration plant: A natural gas cogenerator has been in operation at the Tavernerio site since 2016

Generated value: € 36,608,805

Workers involved in training courses: 29

Waste recovery We are committed to recovering all the waste generated throughout the production process so it can be reused

Ecofriendly packaging which has reduced the amount of plastic used in the trays of our pre-sliced products

Hours of training: 73 Part of project “Work Experience”

S.M.A.R.T project Aimed at developing a sustainable approach to business

Number of employees:103 Agistment breeding farms: Financial investments in agistment breeding farms to build quality, long-term relationships with our agistment partners, driving an entrepreneurial culture in the pig farming sector.

Process development to ensure a longer shelf life for: - Organic products - Fresh products

Objectives for 2020. Fumagalli’s objective for 2020 is to increase its production of ORGANIC products, not just as a user and processor of raw materials but by sharing and becoming an integral part of the “organic supply chain”, establishing farms that rear pigs organically; it also aims to consistently improve the living conditions of the animals on its farms (open farrowing crates, enrichment of their environment, no docking of tails, no filing down of teeth, reduction in the amount of time sows spend in crates after insemination, use of straw bedding, reduction in animal density). In line with its sustainability policy, Fumagalli has decided to embark on a process involving the analysis, quantification and reporting of its emissions of greenhouse gases obtaining an internationally certified carbon footprint.

Our stakeholders The company’s relationship with its network of internal and Fumagalli Salumi has always believed in the value and importance external stakeholders is of the utmost importance to Fumagalli of its workers. To achieve this, the company has adopted an and, as testimony of this, everything it does is in full compliance Organisational Model and Code of Ethics for all its in-house and with the law, while acting responsibly for the wellbeing of its external staff, drawn up in full compliance with the law. clients, the community and the environment. This report is Fumagalli’s main tool for sharing and communicating its social responsibility strategies, company values and commitment to sustainability to its stakeholders.

As regards in-house communication, there Consorzio Assica Salame was a further development in 2019 with the Brianza company newsletter “Fumagalli On Board”; it took on a new form, changing the way it Consorzio Confindustria Prosciutto is organised and communicates, with the Como di Parma aim of becoming a more complete and Consortia and trade comprehensive way of sharing news with associations all the employees.

Consorzio tutela D . O. P.

Zampone e Cotechino Modena IGP Consorzio Mortadella Bologna

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

IVSI

CDO (Compagnia Delle Opere)

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Materiality analysis Materiality analysis involves identifying the aspects, called “material themes”, which are considered relevant by both stakeholders and the company, as they could significantly influence decisions and actions of the stakeholders which, at the same time, could have a considerable economic, social and environmental impact on the company’s activities. In 2019, the group took the themes considered relevant in the materiality analysis of the previous year and, after analysing sector trends on sustainability and studying

reports and the most important publications on the topic, drew up a new materiality analysis. Compared to the previous version of the Sustainability Report, some material themes were removed or, rather, merged with others. The themes were also shared, analysed and evaluated within the company, leading to changes in the materiality matrix, with the relevance of the themes modified according to management’s perception.

List of Fumagalli’s material themes for 2019:

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Product quality

7

Organic products

13 Economic responsibility

2 Training

8

Welfare and safety

14 Compliance with laws

3 Animal welfare

9

Employee appreciation

15 Sourcing policies

4 Supply chain practices

10 Environmental impact

16 Equal opportunities

5 Presence on the domestic market

11 Correct labelling

17 Supporting the community

6 Consumer health and safety

12 Presence on foreign markets

1

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

HIGH

Consumer health and safety Employee appreciation

Presence on foreign markets

Animal Welfare Product quality Supply chain practices Training

Correct labelling

Sourcing policies

Supporting the community

Presence on the domestic market

MEDIUM

Compliance with laws Environmental impact

Equal opportunities

Organic products Welfare and safety

LOW

IMPORTANCE FOR STAKEHOLDERS

Economic responsibility

LOW

MEDIUM

HIGH

IMPORTANCE FOR THE COMPANY FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

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L’identità di Economic Fumagalli responsibility Industria Alimentari

The importance of creating value FUMAGALLI INDUSTRIA ALIMENTARI Analysis of the 2019 market trend is altogether comparable with the results of the previous years, with the domestic market struggling to recover and, consequently, no noticeable upturn in consumption. As well as the general situation of the Italian economy as a whole, 2019 was an especially difficult year for our sector. In particular, following the dramatic rise in demand from China after the African Swine Fever (ASF) outbreak in the East, there was an unprecedented increase in the costs of raw materials.

As the months passed, the situation worsened, especially as regards the prices for cuts destined for transformation and, in particular, the production of salami and bacon. On average, there were increases of 25%. On top of this, Prosciutto di Parma, one of the most important products for the sector (representing 50% of the value of the pig), lost value throughout the year on the finished product market. We tried to increase our presence in different market segments in Italy and abroad. Our range of ORGANIC products played an important part in this. Our sales parameters remained the same as the previous year: approx. 70% foreign sales and 30% in Italy.

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Production value 2019

€ 36,608,805

2018

€ 38,039,199

2017

€ 40,172,289

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

ALLEVAMENTI DI NERVIANO In 2019 Allevamenti di Nerviano and Fumagalli Industria Alimentari S.p.A. established a euro/kg bonus system which is awarded

Production 2019 Type Unweaned piglets 7 kg

No. Turnover 22,228

€ 1,150,587

Unweaned piglets 30 kg

2,194

€ 150,257

Gilts 8 kg

4,559

€ 332,338

Heavy gilts

6,949

€ 1,136,720

Boars sold

311

€ 204,139

30,376

€ 8,059,010

6,160

€ 354,144

Fattened pigs Waste

according to the standard of animal welfare of the fattened pigs and in compliance with new Kiwa regulations which came into force at the end of 2018. In 2019 new agistment partners joined the organisation, completing the places needed to fatten all the production. These new places were added while respecting the animal welfare specifications drawn up by Fumagalli Industria Alimentari S.p.A.

2019 2018 2017*

Turnover

€ 11,507,388

€ 13,176,305

-

Production value

€ 12,025,972

€ 13,369,615

-

* The data for 2017 were unavailable as it was before Fattorie Fumagalli merged with Allevamenti di Nerviano

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

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Creating wealth generated and distributed value Within the scope of our Sustainability Report, and in line with the guidelines used to draw it up, the value generated and distributed is defined as the difference between revenues and production costs and is not paid out to the company’s stakeholders.

Generated and redistributed value

2019 (in €)

2018 (in €)

2017 (in €)

Economic value generated 36,608,805 38,039,199 40,172,289 Economic value distributed 37,371,048 37,948,571 40,086,089

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FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

The “Ethical Pig Farm” project Improving animal welfare on farms and creating an animal-friendly supply chain is a great opportunity for us to impact market segments sensitive to adopting livestock practices which are more respectful of animal welfare.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

This is the thinking behind the “Ethical Pig Farm” project that involves: • sows free to move in the maternity area • creation of an area with a solid floor in the pens • use of enrichment material (straw in racks or straw bedding), alternatives to surgical castration without anaesthesia and analgesia

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CHAPTER

L’identità di Environmental Fumagalli responsibility Industria Alimentari

Our commitment to sustainability Sustainability has been a key issue for Fumagalli for many years, in fact the Environmental Management System at the Langhirano site complies with Regulation (EC) 1221/2009 “EMAS”. All the sites strive to reduce their environmental impact and associated risks, to ensure continuous improvement in their performance. Every day we work to heighten awareness of our environmental policy at every level of our organisation and amongst our suppliers. Our commitment to environmental sustainability also extends to the materials we use for our packaging. Over the past couple of years, Fumagalli has been working on a sustainable packaging project, “Ecofriendly

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packaging”, which uses special films to reduce the amount of plastic used in its sliced meat trays. Our research and development into the sustainability of the materials we use now means that the trays in our Bio organic range are made of 90% paper and only 10% plastic. Thanks to this composition, they can be recycled with paper.

In 2019 the new Ecofriendly pack was presented at the Cibus Connect exhibition in Parma. It is made of 75% FSC mixed paper and has a recyclable paper bottom which respects both the environment and animal welfare.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Raw Materials Thanks to the continuous controls we carry out on the supply chain and compliance with international regulations and standards, we can guarantee the quality of the raw materials we use in our products. In 2019 we processed more than 4,570,782 kg of meat, using 133,527 kg of ingredients including approximately 2,516 kg of flavourings and 44,892 kg of water.

As we have extended the reporting perimeter to Allevamenti di Nerviano, we have also included the feed for our animals in the raw materials reported.

Raw materials (kg)*

Meat processed

2019 2018 2017 4,570,782 4,689,600 4,908,085

Ingredients 133,527 143,337 155,158 of which: Flavourings 2,516 2,578 2,093 Water 44,892 46,636 50,482 Feed

21,942,471 21,027,477 21,726,288

* The calculation of the raw materials processed was updated, so the data in the table have been updated for the three-year period 2017-2019

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

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Electricity consumption and GHG emissions This calculation represents the direct consumption of the three sites - Langhirano, Tavernerio and Nerviano - namely internal consumption due to the use of: • natural gas for heating and the production of domestic hot water at Tavernerio and Langhirano; • LPG for heating at Nerviano; • electricity taken from the grid; • fuel (diesel, petrol and methane) used in vehicles belonging to the company to transport finished products to clients.

In 2019, Fumagalli’s total direct consumption of energy was 50,344 GJ. The 2019 figure does not include third-party transportation, as it was not possible to obtain this information.

2019 2018 2017

Natural gas (m3) 873,705 854,402 912,707 LPG (kg) Electricity (kWh)

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13,280

19,855

26,820

4,225,337

4,384,255

4,037,885

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Divided by source (tCO2eq) Starting from consumption and using the correct emission factors, the following emissions were calculated: • the company’s internal direct emissions, due to combustion of natural gas and LPG, • the company’s internal indirect emissions, due to the purchase of electricity from the grid, • the company’s external direct emission generated by the transportation of incoming raw materials (Fumagalli vehicles only).

It is important to point out that, following an update of some of the emission factors, we updated the data on company emissions for the previous years too, as shown in the table.

Emissions (tCO2eq) 2019

2018

2017

3,224

3,206

3,322

Natural gas 1,958 / 60.7%

Electricity 1,186 / 36.8% LPG 41 / 1.3% Transport diesel 34 / 1% Petrol 5 / 0,1% Transport methane 2 / 0.1%

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

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Water

Waste

Our production facilities in Langhirano and Tavernerio use water from the public network as an ingredient for our products and an essential resource for our production process. For the first time in this Sustainability Report, we also include the water used at the Nerviano facility, which is drawn from a well. The Langhirano and Tavernerio facilities have plants which treat wastewater; the wastewater from Langhirano is not included for 2019.

At Tavernerio and Langhirano, we separate our waste into paper and cardboard, plastic, metals and ferrous materials and they are then taken to companies which recover or dispose of them.

Sludge from the processing of our products, which is classified as non-hazardous waste, is given to third parties to dispose of.

In 2019, 228 kg of slaughter waste was produced at the Nerviano headquarters. It was not possible to obtain information referring to previous years (2017 and 2018) for disposal of waste at the Nerviano headquarters.

2019 2018 2017

Consumption (m ) 89,869 89,989

91,182

Discharged into sewers (m ) 39,384

39,511

3

3

48,151

Waste [t]

2019 2018 2017 348,244

435,960*

409,240*

*Nerviano headquarters not included 48

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Biodiversity

None of our activities have an impact on biodiversity as none of our sites are located in protected areas. It is, however, important to note that the Tavernerio site is located in the Lake Como area of protection and, as a result, is subject to more stringent regulations regarding the discharge of sewage.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

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CHAPTER

L’identità di Social Fumagalli responsibility Industria Alimentari

How to get a job well done Our corporate policy promotes ongoing, constructive dialogue with our stakeholders so their feedback can help us improve. It also encourages us to work together for the sustainable growth of everyone, especially the community Fumagalli works in. Over the course of 2019, the company held a series of training sessions to share its values with all its employees and reflect on the issues and developments that will secure the future of the company.

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An organisation associated with the English project “Ethical Trading Initiative (ETI)” also visited the company, as clients had requested they take a closer look at the working conditions of the employees.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Our employees We have always enjoyed an open dialogue with our employees, as they are the secret to our success and our ongoing objective is to improve the working environment for them.

To achieve this, we constantly evaluate their satisfaction in the workplace, as this provides us with invaluable feedback on how to improve. The Fumagalli Team consists of 103 employees with national collective employment contracts and our aim is to establish a stable, long-lasting working relationship with them to encourage professional growth.

This is why all our employees are taken on with permanent employment contracts.

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EMPLOYEES WHO ARE MEMBERS OF TRADE UNIONS

Employees

F.L.A.I. C.G.I.L. 6 FAI-CISL 13 FILZIAT-CGIL 5 UILA UIL 2

Position 2019 2018 2017

Full-time Part-time Full-time Part-time Full-time Part-time Directors

1 - 1 - 1 -

Officers

White-collar workers

8 1 9 1 9 1 13 2 17 3 17 4

Blue-collar workers

75 3 78 3 81 3

Total

97 6 105 7 108 8

Women Men Women Men Women Men

Directors

- 1 - 1 - 1

Officers

White-collar workers

2 7 3 7 3 7 10 5 12 8 13 8

Blue-collar workers

16 62 15 66 16 68

Total

28 75 30 82 32 84

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

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Training Over the years, Fumagalli has developed a training programme aimed at giving all the workers in the company the professional skills they need to perform their respective duties and roles within the organisation.

The “FUMAGALLI IN FORMAZIONE” training programme, developed throughout 2019, is designed to grow the professional skills and expertise of those involved in safety.

Workers involved at the Tavernerio (CO) site Position Blue-collar workers

20

56

56

White-collar workers

9

16

16

Officers

-

-

-

Total

54

2019 2018 2017

29 72 72

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Suppliers of Fumagalli Industria Alimentari S.p.A. To ensure compliance with contractual requirements, quality, legal and safety standards of our products and the services provided by our suppliers, the company follows a series of strict management and control procedures. All suppliers of products and services who wish to work with the company, with the exception of those chosen personally by company management, are assessed using procedures defined by Fumagalli Industria Alimentari S.p.A. This figure shows our suppliers divided by type.

There were no reports of commercial misconduct by any of our suppliers in 2019 and their working practices had no negative impact on the supply chain.

19 Pork meat 28 Ingredients 1 Pest control 2 Workwear

10 Logistics

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

2 Analysis laboratory

Total suppliers

109

43 Accessory materials 1 Sanitisation 2 Specialist consultants

1 Logistics (transportation of ABP)

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Suppliers di Nerviano S.r.l. Società Agricola Fumagalli Industria Alimentari S.p.A. has to approve all the suppliers of products and services for Allevamenti Di Nerviano S.R.L. This figure shows our suppliers divided by type.

11 Feed 3 Drugs

7 Food supplements 1 Rodent control

8 Materials

1 Semen for insemination 56

3 Transportation 3 Energy

Total suppliers

59

6 Consultation certification 11 Maintenance 1 Workwear

4 Waste disposal FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Relations with the local communities For years now we have worked closely with several organisations to support our local community: Municipality of Tavernerio, Noivoiloro cooperative, sports clubs, Il Melograno cooperative, “Noi genitori factory” and several schools and universities, offering work experience.

Our commitment and support for the “Noivoiloro” cooperative, which helps the disabled, is ongoing.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

A student studying for a master’s in International Marketing Management from the Università Cattolica del Sacro Cuore spent some time at the company to carry out an analysis, specific to the company, regarding the positioning of Fumagalli’s products on the French market.

In 2019 the company provided funding to build a biscuit factory, ‘Noi Genitori Factory’, where educators hold training courses to teach the disabled to make biscuits and bakery products.

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Our relationship with the media communicating and connecting Throughout 2019, Fumagalli continued the communication strategy it had established in previous years, designed to communicate the importance of the company’s transparency to consumers and those in the sector. To achieve this, it further consolidated the features of 2018, launched the new website, grew the e-commerce business and introduced a new section. Narration on the website was organised into two main sections “WHAT IT

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MEANS TO BE FUMAGALLI” and “THE SUPPLY CHAINS”, designed to communicate the history of the company, its commitment to the environment, sustainability and animal welfare, its values and the awards linked to the quality of its products. An entire section of the new site is dedicated to the Ethical Label project, through which the company conveys its vision, identified in the logo-flower with 4 petals: Sustainability, Supply Chain, Safety and Deontology.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Lettera agli stakeholder

01 6

CHAPTER Fumagalli Industria Alimentari è da sempre in prima linea nel cogliere cambiamenti ed evoluzioni del mercato. Aiutati dalle sollecitazioni dei nostri stakeholder, nel corso degli ultimi 10 anni, abbiamo deciso di intraprendere il cammino verso la sostenibilità.

Oggi, più che mai, ci si trova di fronte ad un cambiamento radicale della realtà: l’abuso delle risorse energetiche e la massimizzazione cieca dei profitti hanno generato gravi scompensi all’equilibrio del pianeta e si è rivelato necessario un profond o cambio di paradigma.

La parola sostenibilità è entrata con forza nelle dinamiche socio-economiche di ogni azienda e Fumagalli si è rivelata pronta ad accogliere questo cambiamento, che non è riconducibile solo all’ambiente, ma tocca il rapporto con il territorio. Un nuovo concetto di impresa che si declina in figure di manager che abbiano uno sguardo proiettato sul futuro.

I profondi cambiamenti che stanno avvenendo nel tessuto sociale ci impongono di la-vorare per un modello di etica della nuova cultura d’impresa.

Fumagalli Industria Alimentari è da sempre in prima linea nel cogliere cambiamenti ed evoluzioni del mercato. Aiutati dalle sollecitazioni dei nostri stakeholder, nel corso degli ultimi 10 anni, abbia-

mo deciso di intraprendere il cammino verso la sostenibilità.

Oggi, più che mai, ci si trova di fronte ad un cambiamento radicale della realtà: l’abuso delle risorse energetiche e la massimizzazione cieca dei profitti hanno generato gravi scompensi all’equilibrio del pianeta e si è rivelato necessario un profond o cambio di paradigma.

La parola sostenibilità è entrata con forza nelle dinamiche socio-economiche di ogni azienda e Fumagalli si è rivelata pronta ad accogliere questo cambiamento, che non è riconducibile solo all’ambiente, ma tocca il rapporto con il territorio. Un nuovo concetto di impresa che si declina in figure di manager che abbiano uno sguardo proiettato sul futuro.

I profondi cambiamenti che stanno avvenendo nel tessuto sociale ci impongono di la-vorare per un modello di etica della nuova cultura d’impresa.

L’identità di Product Fumagalli responsibility Industria Alimentari

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FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Our products

Fumagalli Nondirdinò: a range of cured meats designed to meet the latest trends and consumer habits.

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Animal Welfare range: ethically and respectfully produced. A wide variety of delicious cured meats, all with one thing in common: the welfare of the animals reared to produce them, a commitment that the Fumagalli Group holds dear.

Ecofriendly: a responsible, forwardlooking choice. Plastic packaging is becoming more and more of a problem around the world because, when it is released into the environment, it takes an extremely long time to degrade and is a serious threat for ecosystems. This inspired us to come up with new packaging which uses more than 75% of paper and has a completely recyclable tray.

In this way we have combined respect for the environment with delicious products that respect animal welfare.

Fumagalli Bio Organic: Fumagalli’s range of organic products. Serving up only the best cured meats. Fumagalli’s delicious range of organic products is produced by its own 100% organic supply chain, whose production standards are higher than those demanded by EU regulations.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

NEW

Bio+: takeaway products for the Italian market. These stylish trays hold top-quality cured meats from animals which are reared only with organic feed, no antibiotics or substances that can cause allergies.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Fumagalli Selection: a range that has been created for those who love lean products but also want the timeless flavour of great Italian cured meats.

The Black Pig of Lomellina is a native pig of ancient origin; it is actually mentioned in documents dating back to the 15th and 16th century. Fumagalli’s Black Pig cured meats are tasty and unique and processed with great care and expertise. They also have a high Omega 3 and 6 content, fatty acids which play an essential part in human metabolism, thanks to the meat’s natural organoleptic properties.

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CHAPTER

L’identità di Animal Welfare Fumagalli first and Industria foremost Alimentari

Animal welfare in our breeding centres As regards our breeding centres, over the years we have continued to respect the golden rules of Fumagalli’s animal welfare: • Spaces larger than those required by EU regulations • Bedding in manipulable material • Antibiotics? Only when necessary • No mutilation • Top quality, controlled diet • 100% traceability

During transportation, the comfort of the animals is our priority so we insist on: • 4 hours maximum journey time from breeding centre to abattoir • Bedding (wood shavings) • Access to water during transportation • Ventilation in the trailer transporting the animals.

2019 figures Further improvement in animal welfare results on organic farms

80%

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of sows live on straw bedding

75%

of inseminations in pens with freedom of movement

75%

of pigs between 7 and 30 kg grow on straw bedding

35%

of farrowing crates are open

30%

of pigs spend their entire life on straw bedding

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

That is why our respect and commitment to the wellbeing of our consumers and animals goes above and beyond regulatory requirements, enabling the company to expand into new markets and reach new heights. Our animal welfare project, which began in 2014 with our collaboration with the association CIWF Onlus, led to us being awarded a GOOD PIG Commendation in 2015. In 2016 we reached the highest possible accolade, winning the GOOD PIG Award, and in 2017 we were chosen by the European Commission

as a key case study showing how to introduce animal welfare into intensive farming. This recognition led in 2018 to the making of a video which was distributed to European breeders as an example of best practice. Finally, thanks to the partnership between Fumagalli, the British supermarket Waitrose and the supplier Winterbotham Darby, a study was carried out to identify and introduce efficient free farrowing systems for sows. To learn more about the study, please visit the website.

Certified breeding centres

Gold

41.2%

Silver

38.2%

Bronze 20.6%

2019 32.3%

22.6%

45.2%

2018 29.2%

20.8%

50%

2017 FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

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Awards PIETRO PIZZAGALLI WINS “BREEDER OF THE YEAR 2019” AWARD At the Fieragricola trade fair, Pietro Pizzagalli was awarded first prize in the “pig breeding category” by Edagricole in conjunction with Fieragricola Verona.

FUMAGALLI’S ANIMAL WELFARE STANDARDS FEATURED IN THE GUARDIAN

MENTION BY THE EUROPEAN COMMISSION The European Commission chose Fumagalli as an example of best practice for the management of animal welfare at its breeding centres and specifically for its decision to ban tail docking. In 2016 Fumagalli was the only company in Italy to receive the Good Pig Award from Compassion in World Farming in recognition of its commitment to producing cured meats using animal welfare practices.

The prestigious British newspaper, The Guardian, interviewed Pietro Pizzagalli who explained why Fumagalli decided to take a stand for animal welfare on its farms.

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FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Pietro Pizzagalli Breeder of the year 2019

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

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01 8

CHAPTER

L’identità di A top quality, Fumagalli sustainable Industria supply chain Alimentari

Selection and reproduction of our breed The genetics of our pigs is the result of research lasting years: in our genetic selection centre, we cross pure breeds using traditional techniques to obtain pigs with precisely the characteristics we want. Thanks to our efforts in genetic research, our meat is up to seven times softer, less fatty, rich in high-quality proteins, tasty and low in cholesterol.

OUR MEAT

Our meat is up to

7 times softer

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less fatty rich in highquality proteins low in cholesterol

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Breeding Our breeding system is continuously evolving and our aim is to improve our animal welfare conditions even more, giving our fattening pigs more space and greater comfort with straw bedding.

The following actions are taken on the farms where piglets are produced for fattening: • arrival of gilts • about 30 days spent on straw in outdoor paddocks to settle in • insemination with a purebred male line • gestation and farrowing • nursing and weaning

Controlled and certified diet

21 days for weaning

210 days for fattening FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

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Slaughtering The welfare of our animals is our top priority. When our pigs reach optimal conditions, they are sent to slaughter. This is performed at our in-house abattoir or other partner centres where Fumagalli pigs are handled in accordance with regulations which respect traceability and the supply chain. The meat is then processed and the products cured.

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FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Processing Every phase of processing is organised using technologies which constantly monitor production parameters and record and document each stage. The different anatomical cuts obtained from slaughtering are individually coded in order to ensure traceability during the next stages of processing. The finished products are packed in hygienically controlled environments, ensuring traceability and undergoing continuing controls. They are delivered to clients using vehicles suitable for transporting foodstuffs which have the correct refrigeration temperatures (according to the type of product) and comply with current legislation regarding health and hygiene.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

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Our control network In order to ensure the continuous improvement of our management system and guarantee customer and consumer satisfaction, our products, sites and everyone involved in our supply chain are continuously monitored.

This allows us to effectively control all the actions which influence the safety and quality of our products to ensure ongoing improvement.

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All the measures we take to control and verify compliance with the standards we adopt enable us to respond promptly and efficiently whenever there is a report of a possible danger to consumers or when we receive a complaint from them.

In 2019, the falling trend recorded in 2018 continued, with overall NC going from 85 to 68. NC attributed to the production department decreased significantly.

FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Our organic range To meet the demands of a growing market segment whose consumers want the reassurance that products respect the environment, in 2006 we launched our 100% organic range. All the goodness of Fumagalli’s Bio cured meats is presented in paper packaging, in versions with flat and folded slices.

COUNTRIES ORGANIC SALES

ORGANIC PRODUCTION

10

Belgium, Denmark, Finland, France, Germany, Hong Kong, Organic production Iceland, Italy, accounts for Netherlands, Sweden

15%

of the company’s turnover FUMAGALLI INDUSTRIA ALIMENTARI / Sustainability Report 2019

Our organic range follows certain quality criteria: • Carefully selected breeding centres • All animals are kept and fed in larger spaces • The main organic processing phases take place at Fumagalliowned facilities • All stages in production are managed directly by the company to ensure the highest possible quality standards of the products • Organic products are free from potentially allergenic substances, gluten, lactose and milk proteins • All our organic cured meats are produced and certified in accordance with the strictest EEC regulations

Organic production (kg)

2019 2018 2017

Products 176,168 172,778 130,883

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